Journalism that is having its rightful impact. That's what Illinois Attorney General Lisa Madigan called the work of The Chicago Reporter Thursday evening when she gave the publication credit for initiating the largest discriminatory lending settlements in the history of the United States. In a series of investigative stories, the Reporter uncovered that Countrywide Home Loans, Inc. and Wells Fargo Financial Illinois, Inc., were giving black and Latino homeowners sub-standard, predatory loans, regardless of a borrower’s financial situation.
"They are the largest fair lending settlements in our nation's history, and I stand before you today to give credit for initiating that to The Chicago Reporter," said Madigan at the Reporter’s 40th anniversary fundraiser. Madigan spoke at a reception, where 215 people had gathered before attending a live taping of the weekly NPR news quiz show “Wait, Wait ... Don't Tell Me!” at the Chase Auditorium in downtown Chicago.
Lisa Madigan speaks to guests at the fundraiser. Photo by Juan Labreche.
Madigan's comments and the strong turnout for the event were a ringing testament to the muckraking journalism the Reporter has been doing for more than 40 years. Take a look at a timeline of our reporting and the lawsuits they brought about here.
Though she had been investigating sub-prime lending, Madigan said she had not realized the disparate racial impact until the Chicago Reporter's investigation. Here’s how Madigan framed the Reporter's work in marking a turning point in understanding the lending practices that led to the housing crisis:
There is a disconnect between government responsiveness and the good work that is being done outside of government, but I want to give you an example of where things worked the way they should in this world. When I first became the attorney general, we were already seeing a tremendous increase in the numbers of homeowners that were coming to our office because they had been put into predatory, sub-prime loans. Those loans that had, you know, the initial low teaser rate and then the adjustable rate. They had pre-payment penalties, the underwriting standards really had not been followed. People really didn't qualify, based on their income, to be able to sustain these loans once the rates were set.
We took action against some of the largest sub-prime lenders in this country - Household Finance, Ameriquest, Countrywide. During our ongoing litigation of Countrywide, the Chicago Reporter study looking at the HMDA data for the City of Chicago came out, and that study revealed if you are African-American, you are three times more likely to be put into a sub-prime loan than if you were white. If you are Latino, you are two times more likely to be put into a sub-prime loan than if you were white. And most shocking to me was the fact that if you were African-American and earning more than $100,000 a year, you were still more likely to be put into a sub-prime loan than if you were white, Latino or Asian earning less than $35,000 a year.
It was such a startling statistic that I said to the people in the office - we have to investigate, we have to find out if this is true. We determined that in the City of Chicago it was Countrywide and Wells Fargo who were two of the largest sub-prime lenders in the area, and so we subpoenaed them. We got low-level data back from Countrywide. We did an analysis of that data that substantiated what the Reporter had already found. We took that to Countrywide who wasn't overly interested in working with us. In addition, we did the same thing with Wells Fargo. They were a little more belligerent because they were a national bank and claimed that we didn't have the right to do that... But at the end of the day, we filed lawsuits against both Wells Fargo and Countrywide. And after I did that, I took those lawsuits to our U.S. Attorney General Eric Holder and the head of the Civil Rights Division Tom Perez, and I said to them if this is happening in the City of Chicago, this is happening all across the country. You need to investigate this as well. And they did. They were able to substantiate that this type of discriminatory lending had taken place across the country, and we ultimately resolved those two lawsuits. They are the largest fair-lending settlements in our nation's history and I stand before you today to give credit for initiating that to The Chicago Reporter.
The Rev. Al Sharp, the acting executive director of the Community Renewal Society, walks through the crowd. Photo by Juan Labreche.
A supporter casts a bid at The Chicago Reporter's fundraiser. Photo by Juan Labreche
A stack of buttons promote the NPR show "Wait, Wait ... Don't Tell Me!" show. Photo by Juan Labreche
The crowd watched the live taping of "Wait, Wait ... Don't Tell Me!" Photo by Juan Labreche.
Filed under: Housing
Tags: 40th anniversary, attorney general, black, Chicago Reporter, Countrywide, discriminatory lending, investigative, journalism, Juan Labreche, Kimbriell Kelly, Latino, lending, Lisa Madigan, Muckraking, sub-prime, subprime mortgages, Wait, Wait Don't Tell me, Wells Fargo, Yana Kunichoff